Logistics stocks on the move!

Logistics stocks are on the upswing today; almost all on the rise. Allcargo, Gati, VRL Logistics, Snowman Logistics, TCI, Arshiya International, navkar Corp; all in the green. In fact, Gati was the top gainer on the BSE yesterday itself!

A move which has been long in demand was finally fulfilled. The Finance Minister yesterday gave the infrastructure status to the logistics sector.

The biggest advantage of this status is that companies will be able to source funds at a much lower cost. They will now get loans which have longer maturity periods vis-à-vis the manufacturing sector. They are eligible for higher equity ratios while applying for loans and the External Commercial Borrowings (ECBs) become more flexible while refinancing can be done from specialized lenders like IDFC and IIFCL.

This lower borrowing costs could actually help bring down overall transportation and warehousing costs and bring down the total logistics cost. Development of logistics would give a boost to both domestic and external demand thereby encouraging manufacturing and ‘job creation.